Competition unable to take a big bite out of Apple’s iTunes (Updated)

The iTunes Store is rated the best fee-based music services by downloaders in …

iTunes is widening its lead in the digital music market at the expense of other top brands, according to a new report by Ipsos. In its annual TEMPO Digital Music Brandscape Study, the market research firm says that more people are aware of iTunes than ever before and regard it highly compared to other online music destinations. One brand in particular—MySpace—performed particularly poorly, which could mean bad news for the recently-launched MySpace Music.

Ipsos collected web-based surveys from a representative sample of 1,826 US downloaders over the age of 12 and found that 82 percent of those surveyed were aware of iTunes, with Napster taking second place at 76 percent. Although downloaders were also generally aware of MySpace, Yahoo Music, Rhapsody, and Wal-Mart, none of those brands had particularly high numbers of unaided awareness—that is, people thinking of those brands immediately without outside help. While 38 percent of survey respondents reported that iTunes was the first thing they thought of, Napster took a distant second with 15 percent, Yahoo and Rhapsody both had five percent, Wal-Mart had four, and MySpace eked out a measly one percent of unaided awareness.

When it comes to who is considered the best, iTunes again came out with a strong lead. 50 percent of downloaders identified iTunes as the best fee-based digital music service in 2007—a nine percentage point increase from 2006, and a 17-point increase from 2005 (the iTunes Store was launched in 2005). The remaining downloaders were split among the other music stores as the "best," with the largest chunk going to Napster (10 percent in 2007, down one percent from 2006). Wal-Mart stayed stagnant between 2006 and 2007 at 6 percent, while Yahoo Music, Rhapsody, and MySpace all saw declines. MySpace saw the largest decline of the non-iTunes group, falling to five percent in 2007 from eight percent in 2006.

Data source: Ipsos

"iTunes' steady gain as 'best' brand over the past three years does denote a threat to other digital music services, particularly due to the persistent lack of interoperability," Ipsos senior research manager Karl Joyce said in a statement. "While iTunes' growth in 2006 may have come at the expense of Napster, other brands have begun to feel its impact as well, including other top competitors such as Rhapsody and Yahoo! Music. Moreover, social networking's hope of overtaking the lead in mainstream digital music acquisition appears to have fallen short."

These numbers come just a week after data showed that iTunes had become the number one music retailer in the US and MySpace finally announced its long-anticipated MySpace Music portal. From MySpace Music, users will be able to stream ad-supported music for free, download music sans DRM, and buy concert tickets and merchandise, making MySpace Music more of a one-stop shop for those seeking out their favorite bands than many other music stores. But with little independent awareness of MySpace's reputation as a music destination and even lower ratings as the best place to go, MySpace may have more trouble taking a bite out of Apple's pie than we previously thought.

Update: It's true that this study does omit some major players in the digital music game—Amazon MP3 and eMusic, to name a few. Ipsos offers no explanation for this omission. However, one reason may be that the study has tracked these specific brands over a period of years, and some of them (such as Amazon MP3) have not existed for as long and therefore there is no previous data to track. It's clear that this is not a comprehensive study, but it still gives us a good look at trends over time.

Update x2: Ipsos has contacted us and said that the company does, in fact, track Amazon and eMusic data (along with a handful of others), but doesn't include them in the report because their numbers are so small by comparison. Amazon's number is small because it was launched so recently. "Amazon doesn't show up because the data for this study was collected in mid-September, just before the 9/25 public launch of Amazon's music platform," TEMPO study author Karl Joyc told us. "We expect Amazon to make a significant showing in 2008."